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Is a Silver Supply Shortage on the Horizon?

Is a Silver Supply Shortage on the Horizon?

Silver, it seems, is everywhere. The precious metal’s dual role as both an investment and industrial metal means that while it can be bought physically or in paper form by investors, it also has myriad technological and medical applications.
It’s in part because of those many uses that some silver market watchers think at some point — perhaps in the near future — demand for the metal will exceed supply, creating a shortage.

Andrew Chanin, co-founder of the PureFunds ISE Junior Silver ETF (ARCA:SILJ), is one person who believes that’s what’s in the cards. He told Silver Investing News (SIN) in a recent interview that “we’re entering an era where we’re seeing a tug of war between investment demand and industrial demand. I think what people aren’t even considering as a possibility is a potential supply shortage in silver as a result of this squeeze from demand.”

Speaking to Mining Weekly at the Toronto-based PDAC convention earlier this month, Chanin expanded on that statement, giving three reasons why he thinks a supply crunch is in store for silver. Those reasons are:

Mine closures: Several base metals mines, said Chanin, are expected to be depleted in the medium term. While that may not sound like a problem for silver, the fact that the metal is often produced by base metals mines as a by-product means their closure could be an issue.

Increasing industrial applications: The battery, electronics and automotives industries are just a few places where silver’s industrial applications come into play, according to the Silver Institute. Currently, demand for products from those and other sectors is picking up.

Growing investment demand: For evidence that investor demand for silver is picking up, one need look no further than the US Mint, which last year sold a record 42,675,000 American Eagle silver bullion coins. Thus far, investors are showing “healthy” interest in acquiring silver coins in 2014 as well.

Of course, Chanin isn’t the only person predicting an upcoming silver deficit, and those aren’t the only reasons people think that event is in store. In brief, here are a few reasons others have cited:

Price manipulation: Ted Butler of Butler Research states in a 2013 article that many years ago he discovered that “the price of silver stay[s] low because it [is] manipulated by excessive short selling on the COMEX.” That’s significant, he believes, because “nothing invites a shortage more than a prolonged artificial low price and its affect on the law of supply and demand.”

To me silver seems to have greater upside potential than gold. One thing I like about it is that it would be easier to cash in in smaller quantities, or distribute among family members, if the bottom ever dropped out of our economy.

Aslan 11/1/90 - 6/15/10 Stormy 1/22/95 -8/23/10
“There are not one hundred people in the United States who hate The Catholic Church,
but there are millions who hate what they wrongly perceive the Catholic Church to be.” Bishop Fulton J. Sheen

To me silver seems to have greater upside potential than gold. One thing I like about it is that it would be easier to cash in in smaller quantities, or distribute among family members, if the bottom ever dropped out of our economy.

If Monsignor Aslan is bothered by the cumbersome potability of silver and mostly wants to go gold, he could take some (paper) flyers on the select silver stocks and some silver ETF. It goes against the philosophy a bit, but the silver ETF could go stratospheric, presuming he can cash out when the time comes.

If Monsignor Aslan is bothered by the cumbersome potability of silver and mostly wants to go gold, he could take some (paper) flyers on the select silver stocks and some silver ETF. It goes against the philosophy a bit, but the silver ETF could go stratospheric, presuming he can cash out when the time comes.

Aslan prefers the gold he can feel between his fingers to the paper that represents it.

Aslan 11/1/90 - 6/15/10 Stormy 1/22/95 -8/23/10
“There are not one hundred people in the United States who hate The Catholic Church,
but there are millions who hate what they wrongly perceive the Catholic Church to be.” Bishop Fulton J. Sheen

Aslan prefers the gold he can feel between his fingers to the paper that represents it.

Relax. Your fears are ungrounded. This 100T banknote is for you as a free gift from Ben and Hank down at the Fed. And they said thanks for everything.
PS Cash it quick, best chance is that pyramid joint in Vegas...